Cornell Univ., Cornell Research Found., Inc. v. Illumina, Inc.

• Decision Date: 05 February 2018
• Docket Number: C. A. No. 10-433-LPS-MPT
• Parties: CORNELL UNIVERSITY, CORNELL RESEARCH FOUNDATION, INC., LIFE TECHNOLOGIES CORPORATION, and APPLIED BIOSYSTEMS, LLC, Plaintiffs, v. ILLUMINA, INC., Defendant.
• Court: U.S. District Court — District of Delaware

CORNELL UNIVERSITY, CORNELL RESEARCH FOUNDATION, INC.,LIFE TECHNOLOGIES CORPORATION, and APPLIED BIOSYSTEMS, LLC, Plaintiffs, v. ILLUMINA, INC., Defendant.

C. A. No. 10-433-LPS-MPT

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE

February 5, 2018

MEMORANDUM ORDER

I. INTRODUCTION

Cornell University and Cornell Research Foundation, Inc. (referred to collectively as "Cornell" and individually as "Cornell University" and "CRF") are plaintiffs in this action, jointly with Life Technologies Corporation and Applied Biosystems, LLC (collectively "Life Tech"). On May 24, 2010, plaintiffs brought this lawsuit against defendant Illumina, Inc. ("Illumina") alleging infringement of certain patents.¹ The parties entered into a settlement agreement effective April 14, 2017 (the "Settlement Agreement"),² and a stipulation of dismissal pursuant to the Settlement Agreement (the "Dismissal") was entered on April 24, 2017.³ On June 21, 2017 Cornell filed a Motion to Vacate Stipulation of Dismissal Pursuant to Rule 60 and to Rescind Settlement Documents for Fraud or, Alternatively, for Leave to Conduct Discovery ("Motion toVacate").⁴ On August 31, 2017, Cornell filed its reply brief and two declarations in support of its Motion to Vacate.⁵ Currently before the court is Life Tech's Motion to Strike portions of Cornell's reply brief and supporting declarations.⁶

II. BACKGROUND

In its Motion to Vacate, Cornell seeks vacatur of the Dismissal entered in this action because it was submitted pursuant to the Settlement Agreement with Life Tech and Illumina that Cornell was purportedly fraudulently induced to agree to.⁷ It also seeks rescission of the Settlement Agreement and an April 27, 2017 sublicense agreement entered into between Life Tech and Illumina (the "Sublicense Agreement") that was also part of the same allegedly fraudulent scheme.⁸ Alternatively, if the court believes more evidence is needed to support Cornell's requested relief, it asks for the opportunity to conduct discovery, which it contends would also help determine to what degree Illumina conspired in Life Tech's allegedly fraudulent scheme.⁹

In its Motion to Strike, Life Tech asserts Cornell waited until its reply in support of the Motion to Vacate to: (i) address for the first time the parties' rights and obligations under their New Exclusive License Agreement (the "NELA"), which should have been addressed in a full and fair opening brief under D. Del. LR 7.1.3(c)(2), and (ii) includesnew factual allegations in support of Cornell's claim of fraud, including additional personal attacks against Life Tech's in-house counsel Rip Finst and Phil Makrogiannis.¹⁰ In support of Cornell's purportedly untimely new assertions, Cornell includes second declarations of Valerie Cross Dorn and Brian J. Kelly.¹¹ According to Life Tech, those declarations include legal arguments about the parties' NELA and new factual allegations about a 1998 agreement between the parties (most of which are not referenced in the reply brief) to do an end-run around the 10-page limit for reply briefs recited in D. Del. LR 7.1.3(a)(4).¹² Life Tech's motion seeks to strike Section D of Cornell's reply brief,¹³ portions of the Second Dorn Declaration,¹⁴ and the entirely of the Second Kelly Declaration.¹⁵ If, however, the court permits these new allegations, Life Tech requests the opportunity to submit a sur-reply with supporting declarations to address Cornell's new allegations and arguments.¹⁶

III. LEGAL STANDARDS

Delaware Local Rule 7.1.3(c)(2) recites, in relevant part: "Reply Briefs. The party filing the opening brief shall not reserve material for the reply brief which shouldhave been included in a full and fair opening brief."¹⁷ "This provision exists, in part, to prevent litigants from engaging in impermissible 'sandbagging,' reserving crucial arguments for a reply brief to which an opponent cannot respond."¹⁸ Arguments and evidence submitted in violation of this rule may be excluded.¹⁹

Delaware Local Rule 7.1.3(a)(4) provides that "no reply brief shall exceed 10 pages, . . . exclusive of any table of contents or table of citations."²⁰

IV. DISCUSSION

Life Tech contends a central issue in Cornell's Motion to Vacate is whether Life Tech acted within its rights under the NELA in entering into the challenged agreements with Illumina.²¹ Life Tech maintains that with the NELA, Cornell granted Life Tech an exclusive license to the patents asserted in this case, the exclusive right to enforce those patents against Illumina, and sole control of this litigation, including the right to settle and to grant sublicenses under any terms.²² Despite Life Tech's contentions regarding that central issue, Cornell only addressed the NELA in passing in twofootnotes in its opening brief.²³

In its reply brief, however, Cornell included four pages of argument (Section D), and many additional pages in its declarations, substantively addressing the NELA for the first time.²⁴ Life Tech states Cornell conceded these reply arguments were new, but justified its conduct by stating: "Cornell raised Life Tech's likely arguments regarding the NELA in its Opening Brief at pages 16 n.1 and 17 n.2, so it is fully within its rights to address those issues here."²⁵ Life Tech maintains that contention is incorrect because Cornell knew Life Tech's "likely arguments" as it outlined those arguments in correspondence with Cornell well before Cornell filed its Motion to Vacate.²⁶ Life Tech insists Cornell had no reasonable basis not to fully address those arguments in its opening papers.²⁷ It, therefore, requests the court strike the arguments regarding the NELA (Section D) that Cornell decided to save for its reply brief.²⁸

Cornell argues that its reply submissions were based directly on points contained in its opening papers or were in direct response to arguments made by Life Tech or Illumina.²⁹ Cornell maintains Life Tech's motion is merely an attempt to undermine its ability to respond to Life Tech's and Illumina's arguments and should be denied in itsentirety.³⁰ It also asserts there are no grounds to grant leave to submit sur-replies.³¹

Cornell contends there is no basis to strike Section D of its reply brief to Life Tech.³² It maintains Section D addresses Life Tech's arguments that the purported fraud it perpetrated was authorized or somehow excused by the parties' NELA and that Life Tech's assertion that Cornell should be barred from responding to the NELA defenses is baseless.³³

Cornell notes its Motion to Vacate seeks vacatur of the Dismissal and rescission of the Settlement Agreement and Sublicense Agreement based on alleged fraudulent conduct by Life Tech and Illumina.³⁴ Cornell maintains in its opening brief and supporting declarations, it repeatedly referenced the NELA and submitted that Agreement to the court.³⁵ Cornell states it did this despite the fact that Cornell's request for relief is based on the purported fraudulent conduct of Life Tech and Illumina, not the NELA.³⁶

Cornell acknowledges it was aware Life Tech might attempt to rely on the NELA to justify its actions.³⁷ In view of that, in its opening papers, Cornell maintains it expressly addressed and refuted Life Tech's anticipated defenses based on the NELA.³⁸ Cornell states it foresaw that Life Tech might argue that regardless of its purportedfraud, Life Tech's actions were authorized by the NELA, that the NELA obligated Cornell to sign the Settlement Agreement regardless of its terms, and that Cornell must arbitrate this dispute:

In response to this motion, Life Tech will likely argue that its actions were authorized by its license agreement with CRF and that Cornell needs to arbitrate this dispute. First nothing in the parties' license agreement authorizes Life Tech to defraud Cornell or obligated Cornell to sign the Settlement Agreement. This is why Life Tech had to deceive Cornell to obtain Cornell's signature. Second, Rule 60 relief cannot be granted by an arbitrator. Third, this dispute is not subject to any applicable arbitration obligation, because the arbitration clause in the Settlement Agreement only relates to an arbitration between Cornell/Life Tech versus Illumina.³⁹

Cornell also anticipated that Life Tech would argue the NELA granted Life Tech the right to enter into the Sublicense Agreement without notice to or consent from Cornell:

Further, although not directly relevant to this motion, Life Tech was not authorized to enter into the Sublicense Agreement under Section 14.1 of the parties' license agreement, because that provision was only applicable for 90 days after that agreement went into effect in 2010.⁴⁰

Cornell states it expressly addressed those likely Life Tech defenses in its opening brief even though Cornell's Motion to Vacate does not seek relief under the NELA.⁴¹ In its answering papers, Life Tech raised the same defenses Cornell anticipated and addressed in it opening brief.⁴² Life Tech argues that the NELA: (i) obligated Cornell to sign the Settlement Agreement regardless of its contents; (ii) excused its alleged fraud because Life Tech had the right to control this Action; (iii) empowered Life Tech to grant the Sublicense Agreement to Illumina; and (iv) compelled Cornell to arbitrate thisdispute.⁴³ Cornell states it then responded in detail to those attempted defenses under the NELA in it reply papers.⁴⁴

Cornell argues having raised those anticipated defenses in it answering papers, Life Tech now asserts that Cornell is barred from responding in reply to Life Tech's arguments.⁴⁵ Cornell characterizes Life Tech's position as being that Cornell was obligated to use its opening papers to showcase in full Life Tech's potential defenses; a baseless assertion that Life Tech cites no case law to support it.⁴⁶ Cornell insists that Section D of its reply brief is based on its opening papers and directly responds to defenses raised by Life Tech in its answering papers.⁴⁷ Consequently, Cornell maintains there is no basis to strike that secti...